UK leads recession concerns after rate hike

Yasmine Raso

Senior Journalist, Financial Newswire

19 December 2022

Concerns of a UK recession have continued to rise in the wake of another interest rate hike announced by the Bank of England on Thursday, despite a more “moderate” 50-basis-point increase.

Nigel Green, chief executive of financial advisory and asset management organisation deVere Group, said while the central bank has slowed from its previous 75-basis-point increments, December’s 3.5 per cent rate is the highest it’s been since October 2008.

“The news effectively dashes remaining hopes for a shallower recession,” he said.

“The Bank of England seems to be intentionally driving the UK’s consumer-led economy into a deeper recession, putting households and business harder under the cosh, in order to cool inflation.

“The rate rise will immediately hit those on variable rate mortgages, while those with fixed rate mortgages which are soon to expire will be facing higher rates.”

Green warned investors with exposure to UK-based assets to assess their investments and re-position themselves to better protect their money, as the economy shows signs of being “derailed”.

The CEO also recommended “less familiar, return-enhancing asset classes” like venture capital, structured products, high-dividend stocks, hedge funds, managed futures and global equity funds.

“You should take a look at sectors that are likely to be recession-resistant, including food, energy and financial services,” he said.

“The Bank of England decision is another hammer blow for UK households and business and for those with exposure to UK financial assets.”